Hurt by foul weather and a soft market, the Pending Home Sales Index plunged 12 percent in April.
The monthly index is published by the National Association of REALTORS® and measures the number of homes on which new contracts have been written.
It’s the association’s lone “forward-looking” report; meant to predict future, closed home sales. 80% of homes under contract close within 2 months.
Therefore, if the April Pending Home Sales Index is accurate, we should expect home sales to decline through June and July.
On a regional basis, “pending homes” varied. The Northeast Region posted growth. None others did.
- Northeast Region: +1.7% from March
- Midwest Region : -10.4% from March
- South Region : -17.2% from March
- West Region : -8.9% from March
But even regional data remains too broad to be useful to everyday buyers and sellers in the Chicago market. Housing is local and that means that each block, of each street, in each city has its own market and economy. Grouping 9 states into a single “region” is neither helpful nor relevant.
That said, we can’t ignore the data in its entirety.
Housing is believed to be a key component in the nation’s economic recovery. Fewer home sales will retard growth, and slower growth leads mortgage rates down.
Home Affordability hit record-highs last quarter, and should do the same in this one. Homes now sell at discounts to prior prices and mortgage financing is cheap. Buyers tend to be drawn to favorable markets such as this, and that will pressure home prices higher.
If you’re in the market for a home today, conditions look good. Talk to your real estate agent to gauge your options.
